New Ofcom rules crack down on mis-selling

Networks will be placed under further pressure to prevent mis-selling next month, when new Ofcom rules could see them fined up to 10% of their revenues.

General Condition 23 comes into effect on 16 September and will put the onus on the operator if its distributors, dealers or retailers are found to be mis-selling.

Ofcom issued the rules to networks in March. It said operators should take ‘practical steps’, such as sending out newsletters to distributors and dealers.

It also recommended that operators put contractual provisions for retailers in place, and told them to carry out spot checks and mystery shops.

The regulator added that if retailers or distributors were to breach the new rules, networks should give verbal or written warnings or in severe cases, stop dealing with them.

Networks have already outlined the new conditions to distributors. 3 sent a document, seen by Mobile, which said: ‘Any 3 sellers who don’t comply with GC23 and our new minimum standards on mis-selling prevention will be terminated as a 3 Seller.’

Distributors reported they had been talking to their dealers about complying with the rules. One said: ‘We will be making a big deal of this.’

Meanwhile, Orange said it expected to be ‘in full compliance’ with the rules, and added: ‘Breach of any regulatory obligation has a theoretical maximum fine of 10% of annual turnover.

‘In the extremely unlikely event of any fine in this case, it is to be significantly less than 10% of annual turnover.’

O2 said: ‘We have already taken legal action against several companies and we will do so again where there is evidence we can act on.

‘Our sales partners are already required by contract to make sure they sell honestly under the industry code of practice, but we have made a special effort to communicate this particular General Condition to all resellers.’